Margin Lending on the boil

Margin lending for share investments increased to a record $8.9 billion in the March 2002 quarter, a rise of 9 per cent on the December 2001 quarter, according to Reserve Bank figures. Year on year, the rise was 32 per cent. The continued buoyant growth in margin lending has occurred despite the lack of volatility in the share market – the traditional driver of interest in this form of investment – as evidenced by the fall in margin calls made each day. During the March 2002 quarter, margin calls fell to 177 from 220 in the December quarter, a fall of 32 per cent year on year.

The size of margin loans continued to rise, with the average loan now $88,916, with the credit limit used standing at 60 per cent. According to the RBA figures, the margin lending credit limit rose to $16.2 billion in the March quarter from $14.7 billion in the previous quarter, a rise of 37 per cent year on year.

Rob Morton of Macquarie Margin Lending said that business had almost doubled in the past 12 months, with a significant increase in the number of customers as well as an increase in existing customers' loans.